It is somewhat of a surprise, having come off the back of the worst week since August that as we come to the end of this week we look on course to have recovered a good portion of last week’s losses despite the atrocities committed in Paris. If it was the terrorist’s intention to cause economic panic and mayhem it would appear that for now they have failed, though the long term effects of France’s three month state of emergency may yet be felt in the weeks ahead. If anyone were looking for clues this week as to what the European Central Bank and the Federal Reserve were prepared to do next month, then the major clues didn’t come from what the various minutes of the two meetings recorded, but by the differing narratives of the various speakers from both policymaking committees who have been speaking this week, in a blizzard of open mouth operations. Listening to the comments from the number of Fed speakers this week, not least the New York Fed’s Bill Dudley, the markets have come to the conclusion that we will see a move on rates next month, though how the tone of it will be communicated is far from clear. Yesterday’s sell-off in the US dollar would appear to suggest that investors belief that the pace of any increases are likely to be slow, but how do you communicate a dovish hike, it’s a complete oxymoron. On the other side of the coin the ECB’s Chief economist Peter Praet cited concerns surrounding China and the downward pull of falling oil prices on core inflation as key risks, more or less giving the green light to further policy easing at the ECB’s 3rd December meeting. When combined with ECB President Mario Draghi’s comments earlier this week, the ECB will have to deliver on something given that German 2 year yields are within touching distance of -0.4%. With the deposit rate currently at -0.2% anything less than a move to -0.4% will probably be a disappointment. With both men also speaking today any deviation from this week’s dovish rhetoric could catch markets offside. In the UK after a disappointing retail sales number for October saw the annualised numbers also slip back from 6.2% to 3.8%, which while disappointing is still way better than the equivalent US numbers. Today’s public finance data for October is expected to show a modest improvement to £5.5bn from the £8.6bn in September, as he strives to stay on target to hit his borrowing target for the current tax year. In September tax receipts for income tax, VAT and corporation tax were at the strongest on record according to the ONS, so the Chancellor will be hoping that trend continues as he looks forward to next week’s Autumn Statement and comprehensive spending review. One thing is sure, in light of the shocking events in Paris he will have to find extra money to address the heightened security threats now facing the UK, which is likely to change the way he looks at next week’s spending review. EURUSD – we currently have trend line resistance at 1.0740 from the 1.1500 highs. This needs to hold to see a drift. While below 1.0820 the risk remains for a retest of the March lows at 1.0460. If we do manage to get back above 1.0830 we could see a run at the 1.0980 area. GBPUSD – the pound has continued to build support off the 1.5027 lows but needs to push through 1.5330 to encourage the prospect of a move towards 1.5420. Trend line support at 1.5200 is currently supporting this move. A move back below 1.5160 suggests a retest of the lows last week at 1.5027, with major support at the 1.4980 area. EURGBP – having slid below the 0.7040 area we remain at risk of a return to the 0.6935 area and July lows. Interim resistance can be found at the 0.7080 area, and behind that at 0.7160. USDJPY – yesterday’s bearish reversal could signal a return to the 122.20, but as long as we stay above here we can’t rule out a return to the 124.00 area, as well as the possibility of a move through to the August highs at 125.30. Only a move below the 121.80 area would delay the prospect of this scenario unfolding. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.